Most strategies for retirement planning focus on return, not
risk, according to Stark. That’s why the duo decided to turn their attention
instead to people’s true cash needs. “When
most people head into retirement, bills come monthly [while] rates of return don’t
necessarily remain consistent,” Stark noted. Retirees quickly discover they need
consistent cash flow to meet fixed expenses.
90/70/30 rule is based on a formula to help determine an individual’s level of
retirement readiness. The first step is assessing the income gap
all expenses and all anticipated income sources, such as Social Security,
rental property income, interest, dividends, pensions, among others. The most
financially secure people heading into retirement have 90% or more of their
expenses covered by anticipated income, Mission Wealth finds.
next step, the 70/30 assessment, is determining the right proportion of income
and growth investments in the individual’s portfolio, in line with their age
and their health. Up to 70% of a portfolio should be in income investments with
the remaining assets invested in growth to guard against inflation and
longer an individual’s expected retirement, the higher the percentage of their
portfolio should be invested in growth, and vice versa for shorter horizons.